What should a listing firm do if a buyer wants to keep all interest earned on their earnest money deposit?

In the context of real estate transactions, when a buyer wishes to retain interest earned on their earnest money deposit, establishing an escrow arrangement can effectively address the situation. This arrangement involves setting clear terms regarding who receives the interest earned on the earnest money, thereby providing transparency and mutual agreement between the buyer and seller.

An escrow arrangement allows the parties to specify that the interest will be allocated to the buyer, which satisfies the buyer's request and reinforces trust in the transaction process. It also ensures compliance with state laws or brokerage policies that may govern how such funds are handled. By having both the buyer and seller agree to this arrangement, it minimizes the likelihood of disputes or misunderstandings regarding the distribution of interest accrued on the earnest money.

In contrast, the other choices don't adequately respect the buyer's request or establish a clear, mutually agreed-upon process for handling the interest on earnest money. For instance, simply keeping the interest for the firm or refunding it to the buyer without an agreement could create complications or dissatisfaction. Automatically allocating the interest to the seller would directly contradict the buyer's wishes and could lead to friction in the transaction. Therefore, facilitating an agreed-upon escrow arrangement is the most proactive and fair solution to this scenario.